Thursday, November 21, 2013

News From Comptroller John Liu


“The Mayor’s math doesn’t add up. The facts are clear, not only will the next Administration not inherit a balanced budget but it will also be greeted on Day 1 with a fiscal mess of historic proportions – 300,000 employees working with expired contracts.
“Mayor Bloomberg’s final budget modification continues to conceal huge fiscal risks and rely on one-shots like selling City property and depleting the Retiree Health Benefit Trust. His budget may seem balanced on paper, but the fiscal reality points to multi-billion-dollar budget gaps on the fiscal horizon.”

There is a multi-billion dollar budgetary risk associated with the fact that all City unions are currently working under expired contracts. The Bloomberg Administration’s negotiating position with the unions does not include retroactive pay for any contract settlement. The current financial plan includes funding for a settlement of a five-year contract in which the first three years would have no increases followed by two years of 1.25% increases. The unions have all rejected this proposal. Any wage increases above and beyond the funding already in the financial plan would need to be funded through increased revenues or decreased services. 

An analysis by the Comptroller’s office has found that if all unions agreed to a minimal 1% increase a year over the five-year term of the contract, the City would need to fund $1.3 billion in retro pay.  If the wage increase were instead linked to inflation, this number could balloon to $3.1 billion. These numbers are on top of the potential $3.5 billion in retroactive wages that the United Federation of Teachers (UFT) and the Council of School Supervisors & Administrators (CSA) members are seeking.



As Two Ad Firms Prepare for Mega-Merger, NYC Funds Ask Them to Disclose Their Employee Composition and Demonstrate Diversity

  City Comptroller John C. Liu today announced that he has called on the boards of two advertising firms, Omnicom (NYSE: OMC) and Publicis Groupe (PUB: FP), to disclose the makeup of their employees across a range of titles by gender and ethnicity before shareowners vote on their proposed merger. 

“These companies operate in an industry with an abysmal record of hiring and promoting women and minorities, particularly African Americans.  They claim they care about diversity and are making progress, but unless they disclose the actual makeup of their employees it’s impossible to know whether it’s just empty talk,” Comptroller Liu said.  “Studies have demonstrated that workplace diversity leads to innovation and innovation increases value.  We want these firms to prosper by hiring the best and brightest and we expect them to demonstrate that they pay more than lip service to equal opportunity employment.”

The advertising industry, like the financial services industry, has a history of wide and pervasive employment disparities, particularly among senior positions.  One 2009 study found that racial disparity is 38 percent worse in the advertising industry than in the overall U.S. labor market, and that the “discrimination divide” between advertising and other U.S. industries is more than twice as wide as it was 30 years ago. 

Omnicom and Publicis have both declined Comptroller Liu’s past requests that they disclose the composition of their workforce by race and gender.  The pending Omnicom-Publicis merger heightens the need for disclosure.  The merger will not only create an advertising behemoth; it will create the least transparent major ad firm in the world, by combining the two firms that have consistently refused to demonstrate their commitment to equal employment opportunities.

Despite the companies’ assurances that they have existing diversity programs, their refusal to provide employment data makes it impossible for shareowners to determine managements’ effectiveness in this important area.  Meanwhile, the other global ad giants, Interpublic (NYSE: IPG) and WPP Group (WPP: LN), have taken steps to disclose annual data on the diversity of their employees.

In Nov. 2011, on behalf of the NYC Funds, Comptroller Liu wrote several advertising firms — Omnicom, Publicis, Interpublic, and WPP — to ask they disclose employment data. 

When Comptroller Liu filed this request in the form of a shareholder proposal at Omnicom, the company tried and failed to exclude it from their 2012 annual meeting.  At that meeting, 33.8% of voting shares backed the NYC Funds’ proposal, which was the highest ever vote on such a proposal.  Despite broad shareowner support, Omnicom declined to provide employment disclosures even as its peers have done so.

Comptroller Liu and the NYC Funds have also engaged numerous financial services firms — Goldman Sachs (NYSE: GS), MetLife (NYSE: MET), AIG (NYSE: AIG), BNY Mellon (NYSE: BK), and US Bancorp (NYSE: USB) — all of which subsequently agreed to provide comprehensive employment disclosures. 

The NYC Pension Funds hold a combined 829,714 shares in Omnicom and Publicis with a market value of $61 million.

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